The dollar ended the week close to five-month lows against a basket of the other major currencies on Friday, as investors bet that a stronger-than-expected U.S. jobs report would not prompt the Federal Reserve to raise interest rates more quickly.
The Labor Department reported that the U.S. economy added 215,000 jobs last month, ahead of economists’ expectations for jobs growth of 205,000. The unemployment rate ticked up to 5% from an eight-year low of 4.9%, as more people entered the labor market. Average hourly earnings rose by seven cents last month, after falling two cents in February. A separate report showed that U.S. manufacturing activity expanded in March for the first time in six months, as new orders rose. The Institute for Supply Management said its manufacturing index rose to 51.8 from 49.5 in February.
But the upbeat data did little to alter expectations that the Fed will remain cautious about hiking interest rates this year.
In the week ahead, investors will be focusing on Wednesday’s minutes of the Fed’s March meeting, for fresh insights on how officials view the economic outlook. The U.S. is also to release economic reports on trade, manufacturing and service sector activity. A central bank meeting in Australia will also be in focus.
The euro inched up on Friday, posting its fifth consecutive winning session, as currency traders mostly shrugged off a positive U.S. jobs report days, after Federal Reserve chair Janet Yellen said the U.S. central bank would take a cautious approach to the timing of its next interest rate hike.
The currency pair traded in a broad range between 1.1338 and 1.1437, before settling up 0.07% on the session. The euro hit fresh 5-month highs on Friday morning, before the dollar trimmed losses after the release of the mostly upbeat data. In the last month alone, the euro has surged nearly 5% against its American counterpart, as longstanding concerns related to a sharp divergence in monetary policies has faded.
Today the euro zone is to report on the unemployment rate; the U.K. is to release survey data on construction sector activity; while the U.S. is to publish data on factory orders.
Pivot: 1.1435Support: 1.134 1.131 1.1275Resistance: 1.1435 1.1495 1.1535Scenario 1: short positions below 1.1435 with targets @ 1.1340 & 1.1310 in extension.Scenario 2: above 1.1435 look for further upside with 1.1495 & 1.1535 as targets.Comment: the RSI is mixed to bearish.
Gold
Gold prices lost 1% on Friday, as upbeat U.S. employment and manufacturing data sparked speculation the Federal Reserve might raise interest rates sooner and faster than expected. Investors also digested hawkish comments from Cleveland Fed President Loretta Mester; in prepared remarks, she said that the Fed should still raise interest rates gradually this year given the economy's resilience.
Despite Friday’s steep decline, gold prices ended the week with a gain of $1.90, or 0.24%, snapping a three-week losing streak.
In the week ahead, market players will be turning their attention to Wednesday’s minutes of the Federal Reserve’s latest policy meeting, for fresh clues on the timing of the next U.S. rate hike. There are also more than a half-dozen Fed speakers on tap for the coming week, including comments by Fed Chair Yellen on Thursday.
Pivot: 1209Support: 1209 1202 1195Resistance: 1224 1229 1235Scenario 1: long positions above 1209.00 with targets @ 1224.00 & 1229.00 in extension.Scenario 2: below 1209.00 look for further downside with 1202.00 & 1195.00 as targets.Comment: a support base at 1209.00 has formed and has allowed for a temporary stabilisation.
WTI Oil
Oil futures fell sharply on Friday, after the Saudi deputy crown prince said the kingdom will not cap output unless Iran and other major producers do so, casting doubts over whether a highly awaited production freeze will happen.
Iran is expected to attend an oil producers meeting in Qatar on April 17 to discuss an output freeze, although it may not necessarily partake in negotiations. The Islamic Republic has maintained that it will not contribute to any output freeze until its crude exports return to pre-sanction levels.
Furthermore, producers from the Organization of the Petroleum Exporting Countries and non-members are due to meet in Doha, Qatar, later this month to discuss an output freeze.
In the week ahead, oil traders will be focusing on U.S. stockpile data on Tuesday and Wednesday for fresh supply-and-demand signals.
Pivot: 37.7Support: 35.4 34.5 33Resistance: 37.7 38.39 39.07Scenario 1: short positions below 37.70 with targets @ 35.40 & 34.50 in extension.Scenario 2: above 37.70 look for further upside with 38.39 & 39.07 as targets.Comment: the RSI lacks upward momentum.
US 500
Wall Street extended a seven-week rally on Friday, after upbeat U.S. jobs and factory data hinted at stronger corporate earnings without increasing concerns of potential U.S. interest rate hikes.
The Labor Department's report showed solid gains in nonfarm payrolls in March, while the unemployment rate rose to 5% from an eight-year low of 4.9%, as more Americans entered the labor force. Along with another report showing the U.S. manufacturing sector resumed growth in March, the employment data suggested the economy is not growing fast enough to increase concerns about inflation.
The Dow Jones industrial average rose 0.61%, the S&P 500 gained 0.63% and the Nasdaq Composite added 0.92%. For the week, the S&P climbed 1.8%, the Dow added 1.6% and the Nasdaq jumped 3%.
Pivot: 2020 Support: 2020 1970 1950 Resistance: 2080 2100 2130 Scenario 1: long positions above 2020.00 with targets @ 2080.00 & 2100.00 in extension. Scenario 2: below 2020.00 look for further downside with 1970.00 & 1950.00 as targets. Comment: the immediate trend remains up and the momentum is strong. The 20-day simple moving average is trending higher and plays a suppport role.